as amended by ACT (Signed by the President on 19 March 1991) Words underlined with solid line indicate insertions proposed.

Transcription

1 Petroleum (Exploration and Production) Act 2 of 1991 (GG 178) came into force on 30 September 1992 (section 79, as amended by the Petroleum (Exploration and Production) Amendment Act 27 of 1992) as amended by Petroleum Matters (Amendment and Validation) Act 27 of 1992 (GG 489) came into force on date of publication: 30 September 1992 Minerals (Prospecting and Mining) Act 33 of 1992 (GG 564) brought into force on 1 April 1994 by GN 41/1994 (GG 828) Petroleum (Exploration and Production) Amendment Act 2 of 1993 (GG 616) came into force on date of publication: 31 March 1993 Petroleum (Exploration and Production) Amendment Act 11 of 1997 (GG 1700) came into force on date of publication: 8 October 1997 Petroleum Laws Amendment Act 24 of 1998 (GG 1954) brought into force on 1 April 1999 by GN 44/1999 (GG 2075) ACT To provide for the reconnaissance, exploration, production and disposal of, and the exercise of control over, petroleum; and to provide for matters incidental thereto. (Signed by the President on 19 March 1991) EXPLANATORY NOTE: Words underlined with solid line indicate insertions proposed. [ ] Words in bold type in square brackets indicate omissions proposed.

2 Republic of Namibia 2 Annotated Statutes ARRANGEMENT OF SECTIONS 1. Definitions 2. Rights in relation to petroleum PART I Rights in relation to petroleum PART II Administration of Act 3. Appointment of Commissioner for Petroleum Affairs and of Chief Inspector of Petroleum Affairs, and designation of other officers 4. General powers of Commissioner and Chief Inspector 5. Preservation of secrecy 6. Prohibition of certain officers on holding certain interests in any licence or in company holding licence 7. Limitation of liability 8. Functions of Corporation PART III National Petroleum Corporation of Namibia PART IV General provisions relating to licences 9. Prohibition on carrying out certain operations without licence 10. Restrictions on grant of licences 11. Applications for, or renewal or transfer of, licences or for approval for granting, cession or assignation of interest in licence, or to be joined as joint holder of licence 12. Powers of Minister in respect of applications for, or renewal or transfer of, licences or for approval for granting, cession or assignation of interest in licence, or to be joined as joint holder of licence 13. Petroleum agreements 14. Conditions of licences 15. Register of licences 16. Exercise of rights in terms of Act or licence 17. Drilling of wells 18. Records, reports and accounts 19. Cancellation of licences 20. Vis major 21. Directions in order to ensure good oilfield practices PART V Provisions relating to reconnaissance licences 22. Rights of holders of reconnaissance licences 23. Duration of reconnaissance licences 24. Applications for reconnaissance licences 25. Applications for renewal of reconnaissance licences 26. Issue and renewal of reconnaissance licences

3 Republic of Namibia 3 Annotated Statutes 27. Transfer of reconnaissance licences 28. Work programmes of reconnaissance operations PART VI Provisions relating to exploration licences 29. Rights of holders of exploration licences 30. Duration of exploration licences 31. Invitation of applications for exploration licences 32. Applications for exploration licences 33. Applications for renewal of exploration licences 34. Issue and renewal of exploration licences 35. Transfer of exploration licences 36. Work programmes of exploration operations 37. Relinquishment of land by holder of exploration licence 38. Obligations of holder of exploration licence PART VII Provisions relating to discoveries 39. Discovery of petroleum 40. Information to be furnished by holder of licence in whose exploration area a discovery was made 41. Discovery which is not of commercial interest 42. Declaration of petroleum field 43. Right to apply for production licence PART VIII Provisions relating to production licences 44. Rights of holders of production licences 45. Duration of production licences 46. Application for production licences 47. Powers of Minister to grant or refuse applications for production licences 48. Effect of granting of production licence on exploration area 49. Applications for renewal of production licences 50. Issue and renewal of production licences 51. Transfer of production licences 52. Directions by Minister as to recovery of petroleum 53. Obligations of holder of production licence PART IX Ancillary rights 54. Limitation of fundamental rights contemplated in Article 16 of Constitution 55. Establishment of Ancillary Rights Commission 56. Obtaining of rights by holder of licence 57. Consideration of application by Commission 58. Costs incurred in respect of application to Commission 59. Compensation payable in respect of right granted 60. Exercise of rights granted by Commission or otherwise obtained 61. Right of appeal PART X Financial matters

4 Republic of Namibia 4 Annotated Statutes 62. Royalty payable on petroleum 63. Remission and deferment of royalty 64. Powers of Minister in case of failure by holder of licence to pay royalty 65. Security for payment of royalty 66. Proof of royalty payable 67. Annual charges payable by holders of exploration and production licences 68. Penalty for late payments PART XA DECOMMISSIONING OF FACILITIES ON CESSATION OF PRODUCTION OPERATIONS 68A. Review, revision or amendment of decommissioning plans 68B. Establishment of trust funds by holders of production licences for purpose of decommissioning facilities on cessation of production operations 68C. Exemption from taxes 68D. Obligations and rights of holders of production licences in relation to decommissioning plans 68E. Application of this Part [PART XA, comprising sections 68A-68E, is inserted by Act 24 of The capitalisation of the heading of this Part, which is inconsistent with the other Parts of the Act, is reproduced as it appears in the Government Gazette.] PART XI General provisions 69. Removal of property from area in respect of which licence related before expiration, cancellation or relinquishment 70. Further information to be furnished in relation to petroleum recovered 71. Liability of holders of production licences for pollution of environment or other damages or losses caused 72. Service of documents 73. Miscellaneous offences and penalties 74. Jurisdiction of court in relation to offences under this Act committed at sea 75. Evidence 76. Forfeiture orders 76A. Regulations 76B. Incorporation of standard publications by reference [sections 76A-76B inserted by Act 11 of 1997] 77. Amendment of Schedule Amendment of laws 79. Short title and commencement SCHEDULE 1 Fees payable in respect of application for, and renewal of, licences and for inspection of, or obtaining of copies of entries in, the register SCHEDULE 2

5 Republic of Namibia 5 Annotated Statutes Amendment of laws BE IT ENACTED by the National Assembly of the Republic of Namibia, as follows:- Definitions 1. (1) In this Act, unless the context indicates otherwise - block means any area on land or over the sea situated wholly or partly in Namibia and indicated as a block on a map of Namibia prepared by the Minister in terms of subsection (2), and shall include a part of any such block; Chief Inspector means the Chief Inspector of Petroleum Affairs appointed under section 3(1); Commission means the Ancillary Rights Commission established by section 55; Commissioner means the Commissioner for Petroleum Affairs appointed under section 3(1); Corporation means the National Petroleum Corporation of Namibia (Proprietary) Limited incorporated and registered as a company in terms of the provisions of the Companies Act, 1973 (Act 61 of 1973); [The Companies Act 61 of 1973 has been replaced by the Companies Act 28 of 2004.] discovery means the discovery of petroleum recoverable at the surface of the earth in a flow measurable by conventional petroleum industry testing methods; discovery block means a block in respect of which a discovery has been made; drilling, in relation to a well, includes the fitting of wellheads, coring and logging and any operations carried out for purposes of preventing the sides of the well from collapsing or the well from being filled by any extraneous substance; exploration area means the area consisting of the block or blocks to which an exploration licence relates; exploration licence means a licence issued under section 34 and includes any renewal of such licence; exploration operations means any operations carried out for or in connection with the exploration for petroleum, and includes - geological, geophysical, geochemical, palaeotological, aerial, magnetic, gravity or seismic surveys and the appraisal of such surveys and drilling for appraisal purposes; [The word palaeontological is misspelt in the Government Gazette, as reproduced above.]

6 Republic of Namibia 6 Annotated Statutes the study of the feasibility of any production operations or development operations to be carried out in such licence area or of the environmental impact of such operations; good oilfield practices means any practices which are generally applied by persons involved in the exploration or production of petroleum in other countries of the world as good, safe, efficient and necessary in the carrying out of exploration operations or production operations; land includes the seabed within the territorial sea referred to in section 2 of the Territorial Sea and Exclusive Economic Zone of Namibia Act, 1990 (Act 3 of 1990), the exclusive economic zone referred to in section 4 of that Act and the continental shelf referred to in section 6 of that Act, and land beneath any other water, and the subsoil of land; licence means a reconnaissance licence, an exploration licence or a production licence; Minister means the Minister of Mines and Energy; Namibia includes the territorial sea referred to in section 2 of the Territorial Sea and Exclusive Economic Zone of Namibia Act, 1990 (Act 3 of 1990), the exclusive economic zone referred to in section 4 of that Act and the continental shelf referred to in section 6 of that Act; officer means an officer or employee as defined in section 1 of the Public Service Act, 1980 (Act 2 of 1980); [The Public Service Act 2 of 1980 has been replaced by the Public Service Act 13 of Section 38 of Act 13 of 1995 provides that certain expressions relevant to Act 2 of 1980 shall be construed to refer to certain corresponding expressions relevant to Act 13 of 1995, but the term officer is not covered.] petroleum means any liquid or solid hydrocarbon or combustible gas existing in a natural condition in the earth s crust and includes any such liquid or solid hydro-carbon or combustible gas which has in any manner been returned to such natural condition, but shall not include coal, bituminous shales or other stratified deposits from which oil can be obtained by destructive distillation, or gas arising from marsh or other surface deposits; petroleum field means a block or blocks in respect of which a declaration under section 42 is in force; petroleum reservoir means a place in the earth s crust where petroleum accumulated naturally; production area means the area consisting of the block or blocks to which a production licence relates; production licence means a licence issued under section 50 and includes any renewal of such licence; production operations means any operations carried out for or in connection with the production of petroleum; reconnaissance licence means a licence issued under section 26 and includes any renewal of such licence; reconnaissance operations means any operations carried out for or in connection with the search for petroleum by geological, geophysical and photogeological surveys and includes any remote sensing techniques;

7 Republic of Namibia 7 Annotated Statutes this Act includes the regulations made under section 76A; [definition of this Act inserted by Act 11 of 1997] well means a borehole, made by drilling for purposes of exploration operations or production operations, but shall not include a seismic shot hole. (2) The Minister shall as soon as practicable after the commencement of this Act cause a map of Namibia to be prepared showing such blocks which would be situated in Namibia if the earth is divided into blocks - by the meridian of Greenwich and by meridians which are at a distance from that meridian of 15 minutes of longitude or a multiple of 15 minutes of longitude; and by the equator and by parallels of latitude which are at a distance from the equator of 15 minutes of latitude or a multiple of 15 minutes of latitude, each of which shall contain an identification number or letter and which is bounded by portions of two of - such meridians which are a distance from each other of 15 minutes of longitude; and such parallels of latitude which are at a distance from each other of 15 minutes of latitude. (3) The map prepared in terms of subsection (2) shall at all times be available during ordinary office hours at the offices of the Commissioner. (4) The production of a copy of the map referred to in subsection (2) and under the hand of the Commissioner purporting to be a true copy of that map shall, for purposes of any proceedings in any court of law, board or body extablished by or under any law, be conclusive proof of the boundaries of any block indicated on that map. [The word established is misspelt in the Government Gazette, as reproduced above.] Rights in relation to petroleum PART I Rights in relation to petroleum 2. Subject to any right conferred under any provision of this Act, all rights in relation to the reconnaissance or exploration for, production and disposal of, and the exercise of control over, petroleum vests, notwithstanding any right of ownership of any person in relation to any land under which petroleum is found, in the State. PART II Administration of Act Appointment of Commissioner for Petroleum Affairs and of Chief Inspector of Petroleum Affairs, and designation of other officers

8 Republic of Namibia 8 Annotated Statutes 3. (1) The Minister shall, subject to the laws governing the public service, appoint - a person to be known as the Commissioner for Petroleum Affairs; a person to be known as the Chief Inspector of Petroleum Affairs, who shall respectively exercise or perform, subject to the direction and control of the Minister, the powers, duties and functions conferred or imposed upon any of them by or under the provisions of this Act and such other functions as may be imposed upon them by the Minister. (2) The Commissioner and Chief Inspector shall be assisted by such other officers as may be designated by the Permanent Secretary: Mines and Energy for such purpose. (3) The powers conferred and the duties and functions imposed upon the Commissioner or the Chief Inspector by or under the provisions of this Act may be exercised or performed by the Commissioner or Chief Inspector, as the case may be, personally or, except in so far as the Commissioner or Chief Inspector, as the case may be, otherwise determines, by any officer referred to in subsection (2) engaged in carrying out the said provisions under the direction and control of the Commissioner or Chief Inspector, as the case may be. General Powers of Commissioner and Chief Inspector 4. (1) Subject to the provisions of subsection (2), the Commissioner, the Chief Inspector or any officer who is engaged in carrying out the provisions of this Act and who has been authorized thereto by the Commissioner may, for the purposes of the administration of this Act - (d) (e) (f) at all reasonable times enter any area, structure, vehicle, vessel, aircraft or building which has been, is or is to be used in connection with reconnaissance operations, exploration operations or production operations; inspect and test any machinery or equipment which has been, is or is to be used in connection with any of the operations referred to in paragraph ; take or remove, for purposes of analyzing or testing, samples of petroleum or other substances from any land where any operations referred to in paragraph are being carried out; seize samples or substances referred to in paragraph or any book, record or document which may in his or her opinion be used in evidence in connection with any offence in terms of this Act; inspect, make extracts from, and make copies of, any book, record or document in relation to any operations referred to in paragraph ; in relation to the health and safety of persons employed by the holder of a licence, in writing issue directions to, and impose restrictions on, such holder or any person employed by such holder in connection with any operations referred to in paragraph ; (g) in writing direct -

9 Republic of Namibia 9 Annotated Statutes the cessation of operations on or in, and the withdrawal of all persons from, any area, structure or building used in connection with any of the operations referred to in paragraph ; the discontinuance of the use of any machinery or equipment, which the Commissioner, Chief Inspector or officer in question, as the case may be, considers dangerous for the safety of any person, unless such steps as the Commissioner, Chief Inspector or officer in question, as the case may be, may deem necessary to be taken for such safety specified in such notice has been taken; (h) make such investigations and inquiries as may be necessary to ensure that the provisions of this Act and any conditions, directions or orders determined, issued or made by or under this Act are being complied with; conduct an inquiry into the cause of any accident resulting in the death of, or injury to, any person engaged in operations referred to in paragraph, and for such purpose require, any person in writing - [Paragraph is amended by Act 33 of The amendment did not delete the comma which appears after the word require and is now superfluous.] to furnish to him or her in writing and within such period and in such manner as may be specified in such notice with such information as may be necessary for purposes of such inquiry; to appear before him or her at such time and place as may be so specified and to answer questions put to him or her in relation to such inquiry. (2) The Commissioner, the Chief Inspector or officer referred to in subsection (1) shall, before exercising any powers under subsection (1), identify himself or herself to any person who is in charge of the area, structure, vehicle, vessel, aircraft, building, machinery, equipment or petroleum or substance or any other person to whom he or she intends to issue a direction or order or in respect of whom he or she intends to impose a restriction. (3) Any person who feels himself or herself aggrieved by a direction, order or restriction issued to or imposed upon him or her under subsection (1) may appeal in writing, in the case of a direction, order or restriction issued or imposed by the Commissioner or the Chief Inspector, to the Minister or, in the case of any other direction, order or restriction, to the Commissioner against such direction, order or restriction, who shall, as soon as practicable hear and dispose of the appeal and whose decision shall be final. Pending the final determination of an appeal referred to in paragraph such appeal shall not affect the operation of the direction, order or restriction in question. (4) In an appeal in terms of subsection (3) the Minister or the Commissioner, as the case may be, may set aside, vary or confirm the direction, order or restriction in question or may issue or impose any other direction, order or restriction. (5) The Commissioner, the Chief Inspector or officer referred to in subsection (1) may, in the exercise of his or her powers under that subsection, be accompanied by any person who in the opinion of the Commissioner, the Chief Inspector or such officer, as the case may be, has special or expert knowledge of any matter in relation to such powers.

10 Republic of Namibia 10 Annotated Statutes (6) The occupier or person in charge of any area, building, structure, vehicle, vessel, aircraft, machinery or equipment referred to in subsection (1) shall provide the Commissioner, the Chief Inspector or officer so referred to, on payment, if any, of such just compensation as may be determined by such occupier or person, with such facilities and assistance as may be necessary for the exercise of his or her powers under that subsection. Preservation of secrecy 5. (1) The Commissioner, the Chief Inspector and any other officer employed in the Ministry of Mines and Energy, whether or not involved in carrying out the provisions of this Act shall preserve and aid in preserving secrecy in relation to all matters that may come to his or her knowledge in the exercise of his or her powers or the performance of his or her duties and functions in connection with those provisions, and shall not communicate any such matter to any other person or permit any person to have access to any documents in his or her possession or custody, except in so far as any such communication is required by or may be made in terms of this Act or any other law or by order of a competent court. (2) Any person who contravenes or fails to comply with the provisions of subsection (1) shall be guilty of an offence and on conviction liable to a fine not exceeding R8 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Prohibition of certain officers on holding certain interests in any licence or in company holding licence 6. (1) The Commissioner, the Chief Inspector and any other officer employed in the Ministry of Mines and Energy, whether or not involved in carrying out the provisions of this Act, shall not - acquire, whether directly or indirectly, any right or interest in any licence; acquire or hold any share, as defined in section 1 of the Companies Act, 1973 (Act 61 of 1973), in a company which is the holder of a licence. [The Companies Act 61 of 1973 has been replaced by the Companies Act 28 of 2004.] (2) For the purposes of paragraph of subsection (1), the acquisition or holding of a share, as defined in section 1 of the Companies Act, 1973, in a company by the husband or wife of the Commissioner, the Chief Inspector or an officer referred to in subsection (1), shall be deemed to be an acquisition or holding, as the case may be, by the Commissioner, the Chief Inspector or such officer, as the case may be. [The Companies Act 61 of 1973 has been replaced by the Companies Act 28 of 2004.] (3) Any document or transaction purporting to grant any right or interest referred to in paragraph of subsection (1) upon, or any share certificate purporting to vest any shares referred to in paragraph of subsection (1) in, the Commissioner, the Chief Inspector or any such officer shall be null and void. (4) Any person who contravenes or fails to comply with the provisions of subsection (1) shall be guilty of an offence and on conviction liable to a fine not exceeding R or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment.

11 Republic of Namibia 11 Annotated Statutes (5) In any prosecution for a contravention of paragraph of subsection (1) it shall be a sufficient defence if the accused person proves - that the share in question was acquired by operation of law and that all reasonable steps necessary have been taken, and are being taken, to dispose of such share; or that such share was acquired before he or she became the Commissioner, the Chief Inspector or an officer referred to in subsection (1) or before the company became the holder of a licence and that as from the date on which he or she became the Commissioner, the Chief Inspector or such officer or as from the date on which such company became the holder of a licence, as the case may be, all reasonable steps necessary have been taken, and are being taken, to dispose of such share. Limitation of liability 7. No compensation shall be payable by the State or by the Commissioner, the Chief Inspector and any other officer employed in carrying out the provisions of this Act in respect of any act done in good faith under this Act. Functions of Corporation PART III National Petroleum Corporation of Namibia 8. (1) The functions of the Corporation shall be - when required by the Minister - (iii) to carry out reconnaissance operations, exploration operations and production operations, whether on its own or together with any other person; to carry out any process of refining, or disposing of, or dealing in, petroleum or any by-products of such petroleum, or to take part in any such process carried out by any other person; to advise or otherwise assist the Minister in relation to, or in any negotiations in relation to any agreement referred to in section 13, or in relation to the discovery of, petroleum or the development of petroleum resources; (d) to carry out, whether on its own or together with any other person, reconnaissance operations or, in terms of a licence, exploration operations or production operations; to carry out on behalf of the State any reconnaissance operations, exploration operations or production operations together with any other person; to assist the Commissioner on his or her request in the exercise by him or her of his or her powers, duties and functions under this Act. (2) The Corporation shall be competent to perform in Namibia or elsewhere such actions as may be necessary or expedient to be performed for or in connection with the exercise of its powers and the performance of its duties and functions under this Act.

12 Republic of Namibia 12 Annotated Statutes (3) The Corporation shall, for purposes of the application of subsection (1), be deemed to be the holder of a licence. (4) The Minister shall not require the Corporation under subsection (1) to carry out any operations or process referred to in paragraph or of that subsection, unless he or she - has by notice in writing informed the Corporation of his or her intention to so require the Corporation setting out particulars of such operations or process; has afforded the Corporation an opportunity to make representations in relation to such intention; is satisfied, after having considered any such representations so made, that it is in the public interest that such operations or process should be carried out by the Corporation and that the Corporation has the financial and technical ability and capacity to carry out such operations and process. PART IV General provisions relating to licences Prohibition on carrying out certain operations without licence 9. (1) Subject to the provisions of this Act, no person shall - carry out any reconnaissance operations, exploration operations or production operations for petroleum in or upon any land in Namibia, except under and in accordance with a licence; transfer a licence or grant, cede or assign any interest in a licence to any other person, or be joined as a joint holder of a licence otherwise than in writing and with the approval in writing of the Minister. (2) Any person who contravenes or fails to comply with the provisions of subsection (1) or any term or condition of a licence or approval so referred to shall be guilty of an offence and on conviction liable to a fine not exceeding R or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Restrictions on grant of licences 10. A licence other than a reconnaissance licence shall not be issued or transferred to any person other than a company, and no interest in any such licence shall be granted, ceded or assigned to any person other than a company. Applications for, or renewal or transfer of, licenses or for approval for granting, cession or assignation of interest in licence, or to be joined as joint holder of licence 11. (1) An application - for, or renewal of, a licence; for the transfer of a licence, or for the approval of the Minister for the granting, ceding or assigning of an interest in any licence, or to be joined as a joint holder of a licence,

13 Republic of Namibia 13 Annotated Statutes shall be made to the Commissioner in such form as may be determined by the Minister and shall be accompanied by a fee specified in column 2 of Schedule 1 in respect of the application specified in column 1 of that Schedule. (2) Subject to the provisions of this Act, the Minister may grant on such terms and conditions as may be determined by him or her, or refuse to grant, an application referred to in subsection (1). (3) The transfer of a licence shall not affect any legal proceedings instituted against the holder of such licence, and such legal proceedings shall be continued as if such transfer had not taken place. (4) The granting, ceding or assigning of any interest in a licence shall not affect any obligation or liability of the holder of the licence imposed in terms of such licence or any provisions of this Act. Powers of Minister in respect of applications for, or renewal or transfer of, licences or for approval for granting, cession or assignation of interest in licence, or to be joined as joint holder of licence 12. (1) The Minister may at any time after the receipt of any application referred to in section 11 require the person concerned by notice in writing - to furnish him or her within such period as may be specified in such notice with - such information as may be specified in such notice as the Minister may in his or her discretion deem necessary to enable him or her to determine who has, in the case of a company, the controlling interest in the affairs of such company; such other information as may be specified in such notice as the Minister may in his or her discretion deem necessary for purposes of considering such application; to publish such particulars of the application in such manner as may be specified in such notice; to give such particulars of the application in such manner and to such person or persons as may be specified in such notice. (2) In order to enable the Minister to consider any application referred to in section 11 the Minister may - cause such investigations or negotiations to be made or undertaken as the Minister may in his or her discretion deem necessary; require the person concerned by notice in writing - to carry out or cause to be carried out such environmental impact studies as may be specified in such notice; to furnish the Minister within such period as may be specified in such notice with such proposals, by way of alteration to or in addition to proposals set out in the application, as may be so specified.

14 Republic of Namibia 14 Annotated Statutes (3) In considering any application referred to in section 11 and the conditions subject to which such application shall be granted, the Minister shall take into account the need to conserve and protect the natural resources in or on the block or blocks to which the application relates and in or on adjoining and neighbouring land. (4) If the Minister is, after having considered an application referred to in section 11, prepared to grant such application subject to certain terms and conditions, he or she shall direct that notice be given to the person concerned in which the terms and conditions, in addition to the terms and conditions referred to in section 14, are set out on which he or she is prepared to grant such application. The person referred to in paragraph may, within 60 days as from the date of that notice or such further period as the Minister may on good cause shown allow in writing, agree in writing to accept such terms and conditions or such other terms and conditions as may be agreed upon. (5) If the person making an application referred to in section 11 fails to comply with the requirements of any notice referred to in this section within the period specified in such notice or such further period as may on good cause shown be determined by the Minister in writing, the application in question shall lapse on the expiration of such period. Petroleum agreements 13. (1) The Minister shall, before an exploration licence or, in the case of a person who is not the holder of an exploration licence in respect of a block or blocks in the petroleum field for which a production licence is required, a production licence is issued by virtue of an application referred to in section 11, enter into an agreement, not inconsistent with the provisions of this Act, with the person concerned containing the terms and conditions agreed upon as provided in section 12(4) on which such licence is issued. (2) An agreement referred to in subsection (1) shall include terms and conditions relating to the basis on which the market value of petroleum may from time to time be determined, and may include terms and conditions relating to - (d) (e) the name of the company concerned, particulars of its incorporation and registration as a company, the registered address of the company, the names and nationality of the directors of the company, the share capital of the company and the name of any person who is the beneficial owner of more than five per cent of the shares issued by such company; minimum exploration operations or production operations to be carried out and the time-table determined for purposes of such operations; the minimum expenditure in respect of exploration operations or production operations; the formation of joint ventures or the operation of production sharing or other joint arrangements, including profit-sharing by the State; the participation, including the acquisition of equity share capital, by the State, the Corporation or any other person in any ventures or arrangements referred to in paragraph (d) and, in the case of profit-sharing by the State, a basis upon which the holder of a production licence may be exempted, wholly or partly, from any provision of the Petroleum (Taxation) Act, 1991, or any other law governing taxes on income;

15 Republic of Namibia 15 Annotated Statutes (f) (g) (h) (j) the manner in which reconnaissance operations, exploration operations or production operations, as the case may be, shall be carried out; guarantees to ensure the due and proper performance by the company of its obligations; financial and insurance arrangements; arbitration in the event of any dispute which may arise in the application of any term or condition contained in such agreement, whether in terms of the provisions of the Arbitration Act, 1965 (Act 42 of 1965), or by way of any international arbitration tribunal specified in such agreement; co-ordination of operations for the recovery of petroleum carried out or to be carried out in any neighbouring production area in which part of the petroleum reservoir to which the production licence relates is situated. (3) The Minister may, if he or she deems it necessary for purposes of the co-ordination of operations contemplated in paragraph (j) of subsection (2), direct a holder of a production licence from time to time by notice in writing addressed and delivered to such holder, to carry out such operations in such manner as may be specified in such notice. (4) Any term or condition contained in an agreement referred to in subsection (1) which is inconsistent with any provision of this Act shall to the extent in which it is so inconsistent be of no force and effect. (5) Nothing contained in an agreement referred to in subsection (1) shall be construed as absolving any party thereto from any requirement laid down by law or from applying for, and obtaining, any permit, licence, approval, permission or other document required by law. Conditions of licences 14. (1) It shall be a condition of any licence that the person to whom such licence has been issued shall - (d) (e) in the employment of employees, give preference to Namibian citizens who possess appropriate qualifications for purposes of the operations to be carried out in terms of such licence; carry out training programmes in order to encourage and promote the development of such citizens in such person s employment; after due regard being had to the need to ensure technical and economic efficiency, make use of products, equipment and services which are available in Namibia; co-operate with other persons involved in the petroleum industry in order to enable such citizens to develop skills and technology to render services in the interest of such industry in Namibia; if any mineral, as defined in section 1 of the Mines, Works and Minerals Ordinance, 1968 (Ordinance 20 of 1968), is discovered by such person, forthwith report such discovery to the Minister.

16 Republic of Namibia 16 Annotated Statutes (2) The Minister may, for the purposes of paragraph of subsection (1), enter into agreements with licence holders providing for - the implementation of training programmes referred to in that paragraph; and the contribution of moneys to the trust known as the Petroleum Training and Education Fund, for promoting the objects of that trust. Register of licences [section 14 amended by Act 2 of 1993, to insert subsection (2)] 15. (1) The Commissioner shall keep and maintain a register in such form as may be determined by the Commissioner in which shall be recorded - (d) (e) (f) the name of every holder and joint holder of a licence; the nature of the licence issued to him or her and the block or blocks in respect of which such licence has been issued; the terms and conditions relating to the licence; the liabilities and obligations of every holder in relation to the payment of royalty and other fees in terms of this Act; the names of the persons, if any, to whom any interest in any licence has been granted, ceded or assigned and the nature of such interest; such other particulars as may from time to time be determined by the Minister. (2) The register referred to in subsection (1) shall during ordinary office hours be open for inspection by any person on payment of the fee specified in column 2 of Schedule 1, and any person may on payment of the fee so specified make or obtain copies of any entry in such register. (3) A person who fraudulently - makes or causes to be made any entry in the register referred to in subsection (1) which is false; prepares or submit any copy of an entry in such register which is false or causes such copy to be prepared or submitted, shall be guilty of an offence and on conviction liable to a fine not exceeding R8 000 or to imprisonment for a period not exceeding two years or to both such fine and such imprisonment. Exercise of rights in terms of Act or licence 16. (1) The holder of a licence shall not exercise any rights conferred upon him or her by this Act or under any terms and conditions of such licence - in, on or under any - town or village;

17 Republic of Namibia 17 Annotated Statutes (iii) land comprising a public road, aerodrome, harbour, railway or cemetery; land used or reserved for any governmental or public purpose, except with the approval of the Commissioner granted by notice in writing and subject to such conditions as may be specified in such notice; in, on or under any land - (iii) (iv) used as a garden, orchard, vineyard, nursery, plantation or which is otherwise under cultivation; within a horizontal distance of 100 metres of any spring, well, borehole, reservoir, dam, dipping-tank, waterworks, perennial stream, artificially constructed watercourse, kraal, building or any structure of whatever nature; within a horizontal distance of 300 metres from any point on the nearest boundary of any erf, as defined in section 1 of the Townships and Division of Land Ordinance, 1963 (Ordinance 11 of 1963), if such erf has been surveyed for the purpose of inclusion in a township as defined in that section; on which accessory works, as defined in section 1 of the Mines, Works and Minerals Ordinance, 1968 (Ordinance 20 of 1968), were erected under that Ordinance and which existed at the time of the issue of the licence in question, except with the permission in writing, previously obtained in every particular case, of the owner of the land or works on which it is proposed to exercise such right; in, on or under any mining area or claim area as defined in section 1 of the Minerals (Prospecting and Mining) Act, 1992, which existed at the time of the issue of the licence in question, without the approval in writing, previously obtained in every particular case, of the Minister given after consultation with the owner, as defined in paragraph of the definition of owner in section 1 of the said Ordinance; [paragraph amended by Act 33 of 1992] (d) (e) which in any way will interfere with fishing or marine navigation, without the approval in writing, previously obtained in every particular case, of the Minister; in, on or under such land or area as may be determined by the Minister by notice in the Gazette, without the permission in writing, previously obtained in every particular case, of any person specified in such notice. (2) When, in the course of any exploration operations or production operations in any exploration area or production area, as the case may be, any damage is caused or done to the surface of any private land or to any cultivation or building thereon as a result of those operations, the holder of the licence concerned shall be liable to pay compensation to the owner of the land on which such area is situated. When a dispute arises between the holder of a licence and the owner of land referred to in paragraph in relation to the liability for, or the amount of, compensation payable under that paragraph such holder or owner or such holder

18 Republic of Namibia 18 Annotated Statutes and such owner may make application in writing to the Commission to have the matter determined. The provisions of this subsection shall not be construed as prohibiting an owner of private land or an authority administering land from instituting civil proceedings in any court of law against the holder of a licence for any damage referred to in paragraph. (3) When the owner of land or any authority administering land on which exploration operations or production operations are being carried out in an application to the Minister - states that such operations prevent the proper use of the land wholly or partly for farming purposes; and requests that the holder of the licence concerned carrying out such operations be required to purchase so much of the land as cannot be so used, the Minister may, if he or she is satisfied that the operations prevent the land from being so used, by notice in writing addressed and delivered to such holder, direct such holder to purchase so much of the land as cannot be so used on such conditions as may be specified in such notice. When the holder of a licence and the owner of land or an authority administering land are unable to agree on the price to be paid for land to which a direction under paragraph relates, the price and mode of payment shall be fixed by arbitration. (4) Any person who contravenes or fails to comply with the provisions of subsection (1) or any direction referred to in subsection (3) shall be guilty of an offence and on conviction liable to a fine not exceeding R or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Drilling of wells 17. (1) A holder of a licence shall not drill in connection with any reconnaissance operations, exploration operations or production operations any well of which any part is less than metres from any boundary of the area to which such holder s licence relates, except with the approval in writing, previously obtained in every particular case, of the Minister and in accordance with such conditions, if any, as may be determined by the Minister. (2) If the holder of a licence contravenes or fails to comply with the provisions of subsection (1) or fails to comply with any conditions so referred to, the Minister may by notice in writing addressed and delivered to such holder, order such holder - to plug or close off such well; to take such other steps in relation to the drilling or maintenance of such well as may be specified in such notice. (3) Any holder of a licence who contravenes or fails to comply with the provisions of subsection (1) or an order made under subsection (2) shall be guilty of an offence and on conviction liable to a fine not exceeding R or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Records, reports and accounts

19 Republic of Namibia 19 Annotated Statutes 18. (1) The holder of a licence shall - keep at such holder s registered address proper record in such form as may be determined by the Commissioner and made known by notice in the Gazette or by notice in writing to such holder of such particulars as may be so specified in relation to - (iii) (iv) (v) the drilling, operation, deepening, plugging or abandonment of wells for purposes of or in connection with reconnaissance operations, exploration operations or production operations; the nature of substances, including petroleum, water and minerals, found in wells drilled for purposes of or in connection with such operations, and the depths at which it has been found; the casing of wells; the areas in which any geological or geophysical work has been carried out; geological and geophysical surveys carried out in such areas; prepare or cause to be prepared and maintain at all times geological maps and plans in respect of the area to which such holder s licence relates; submit, within 30 days after 30 June and 31 December, respectively in each year, to the Commissioner, in such form as may be determined by the Commissioner and made known by notice in the Gazette or by notice in writing to such holder - a summary of geological and geophysical work carried out, and drilling activities performed, including the results of the analysis of any substances extracted from any well, in the area to which the licence of such holder relates during the period preceding 30 June or 31 December in every year, as the case may be; a list of maps and geological and geophysical reports prepared by or on behalf of such holder in connection with operations carried out in terms of the licence issued to such holder. (d) submit, within 60 days after the end of each year of the currency of the licence in question, to the Commissioner, in such form as may be determined by the Commissioner and made known by notice in the Gazette or by notice in writing to such holder, a return in which is recorded particulars in relation to - the results of exploration operations or production operations, if any, carried out by such holder during the preceding year; the estimates of petroleum recoverable in the area to which the licence in question relates for the period ending on the last day of the succeeding year; (e) submit, on each day on which drilling operations are carried out, to the Commissioner, in such manner as may be determined by the Commissioner and made known by notice in the Gazette or by notice in writing to such holder, a report on such drilling operations carried out on the previous day.

20 Republic of Namibia 20 Annotated Statutes (2) In the event of the cancellation of a licence under section 19 or the expiration of a licence the person who was the holder of such licence immediately before such cancellation or expiration shall on a date not later than three months after the date of such cancellation or expiration deliver to the Commissioner - (d) all records kept in terms of the provisions of subsection (1); all maps and plans referred to in subsection (1); all tapes, diagrams, profiles and charts prepared by or on behalf of such person in relation to the licence held by such person; such other books, documents, records and reports as the Commissioner may require by notice in writing addressed and delivered to such person. (3) Any holder of a licence or person referred to in subsection (1) or (2) who contravenes or fails to comply with the provisions of subsection (1) or (2), as the case may be, shall be guilty of an offence and on conviction be liable to a fine not exceeding R or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment. Cancellation of licences 19. (1) Subject to the provisions of section 20 and subsection (2) of this section, the Minister may by notice in writing addressed and delivered to the holder of a licence, cancel the licence of such holder or, in the case of two or more persons who are the holders of such licence, cancel the licence in respect of any one or more of such holders, if - any such holder fails to comply with the terms and conditions of such licence or of the provisions of this Act; in the case of a company, such company is wound up in terms of the provisions of the Companies Act, 1973 (Act 61 of 1973), unless such company has been wound up for purposes of an amalgamation or reconstruction, as contemplated in that Act, and has previously obtained the approval of the Minister for such amalgamation or reconstruction. [The Companies Act 61 of 1973 has been replaced by the Companies Act 28 of 2004.] (2) The Minister shall not under subsection (1) cancel a licence so referred to, unless - the Minister has by notice in writing informed the holder of such licence of his or her intention to cancel such licence - setting out particulars of the alleged failure; calling upon such holder to make such representations to the Minister as he or she may deem necessary or expedient within such period, but not less than 60 days as from the date of such notice, as may be specified in such notice; the Minister has taken into account - any steps taken by such holder to remedy the failure in question or to prevent any such failure from being repeated during the currency of the licence;

21 Republic of Namibia 21 Annotated Statutes any other matters submitted to the Minister by way of the representations made under paragraph ; in the case of a holder of a licence who has failed to pay any amount payable by him or her in terms of this Act or by virtue of the terms and conditions of the licence in question, such holder has, before the date specified in the notice referred to in subsection (2), paid any such amount, together with any interest payable in respect of such amount. (3) The Minister may, on application in writing made to him or her by the holder of a licence in such form as may be determined by the Minister, cancel by notice in writing any licence or amend, on such conditions as may be determined by the Minister, any such licence by the deletion of any block or blocks in relation to which the licence in question has been issued. (4) The cancellation of a licence in terms of the provisions of this section shall not affect any obligation or liability incurred in relation to anything done under or by virtue of the terms and conditions of such licence. Vis major 20. (1) Any failure by the holder of a licence to comply with any term or condition of such holder s licence or any provision of this Act shall not be regarded as being a failure to comply with such term, condition or provision in so far as such holder was prevented from complying with such term, condition or provision due to an act of war, hostility or insurrection or an act of God. (2) The holder of a licence who is prevented from complying with a term, condition or provision as provided in subsection (1) shall forthwith inform the Minister by notice in writing setting out particulars of the nature, extent and causes of his or her failure to comply with such term, condition or provision specified in such notice. (3) The Minister may, on application made to him or her by the holder of a licence referred to in subsection (2) who has been prevented from exercising any rights under his or her licence for any period in the circumstances contemplated in subsection (1) extend by notice in writing on such conditions as may be determined by the Minister the period for which the licence in question has been issued, by such period as may be determined by the Minister due regard being had to the provisions of this Act relating to the period after which licences of the nature of the licence in question expire. The Minister may refuse any application referred to in paragraph if the holder of the licence concerned could, by taking reasonable steps which were available to such holder, have exercised such rights during that period. (4) The provisions of this section shall not be construed as absolving any holder of a licence from complying with any obligation under a licence or this Act to pay any royalties, annual charges, rent or fees. Directions in order to ensure good oilfield practices 21. (1) The Minister may, due regard being had to good oilfield practices, by notice in writing addressed and delivered to the holder of a licence, give directions to such holder in relation to -